Don’t Mess With Seniors’ Discounts


Would you bet $5 if you had an equal chance of doubling — or losing — it? Yes? How about $50? $500?

Although the chance of a gain is exactly equal to the chance of a loss, most of us wouldn’t take this bet. Experiments prove that we are far more sensitive to the pain of loss than the pleasure of gain.

And this doesn’t just apply to our cold hard cash. Experimenters have also shown that, once we have something, even for a little while, we just don’t want to give it up.

In one experiment, a group of students received coffee mugs while a second group was given chocolate bars.

The students were then able to trade their mug for a Swiss chocolate bar, or their chocolate bar for a mug. A third control group was given the choice between the mug or the chocolate bar.

The control group had no strong preference: 56 per cent chose the coffee mug, while 44 per cent chose the chocolate bar.

Based on these preferences, we’d reasonably expect that roughly half of those who had been given the mug would trade it for the chocolate, and vice versa.

But that’s not what happened.

Instead, the students who were given a mug or a chocolate bar became pretty attached to it. Some 89 per cent of students who were initially given the coffee mug chose to keep it while 11 per cent decided to trade it for the chocolate bar.

Students given a chocolate bar to start had a similar reaction: Only 10 per cent of them swapped it for the mug.

This phenomenon of a strong, almost instant preference for a randomly assigned item has been given a name: the endowment effect.

I suspect this effect is at least partly responsible for the pushback we’ve seen from CARP members about restricting seniors’ discounts.

With 1,000 people a day turning 65, and more of us living longer, an increasing number of folks qualify for seniors’ discounts.

That means municipal government coffers are taking a hit. That’s why London, Ont., has eliminated its seniors discount fares and why Kingston, Ont., is reviewing similar reductions in seniors discounts for municipal services.

CARP members are split on whether there really is an affordability crisis; roughly a third agreed, a third were neutral and another third disagreed that seniors’ discounts are becoming increasingly expensive and governments are struggling to afford them.

Just over half (52 per cent), meanwhile, agree or strongly agree that it’s OK for seniors to pay their fair share if they can afford to do so.

But the arguments in favour of discounts resonated far more strongly. Eight in ten CARP members agree or strongly agree that:

• seniors have earned their benefits,

• having to prove a low income will stigmatize recipients,

• removing discounts could lead to social isolation and

• electronic application processes will deter seniors from applying for discounted benefits.

There was little appetite for changing the age of discount eligibility, with only 19 per cent of respondents supporting an increase to age 70 and only 5 per cent supporting an increase to age 75.

Any government thinking of changing discount eligibility would be wise to tread carefully.

The endowment effect predicts that people receiving something will form a strong, almost instant bond to it. Seniors have apparently bonded with their benefits, and would feel a significant loss if they’re taken away.

Perhaps the solution is to delay benefits. But even that has its hazards. Ask Stephen Harper about the deferral of the OAS age from 65 to 67. You remember him? He was the Prime Minister — before he took on Canada’s seniors and seniors-in-waiting.

For the complete survey results of CARP members regarding seniors discounts, see

Grey Matters is a weekly column by Wanda Morris, the VP of Advocacy for CARP, a 300,000 member national, non-partisan, non-profit organization that advocates for financial security, improved health-care for Canadians as we age. Missed a week? Past columns by Wanda and other key CARP contributors can be found at